Monday, January 4, 2016

3 Key Tips to Help Ensure Your Mortgage Pre-Approval Isn't Declined

If you're thinking about buying a new home and using a
mortgage to help cover some of the purchase costs, it's a good idea to get an
initial pre-approval from your lender before putting in an offer. In today's
blog post we'll share three quick tips that can help to ensure that your
mortgage pre-approval isn't declined.

Demonstrate Your Income and Good Credit

A mortgage is a major financial transaction and one that
carries a certain amount of risk for the lender. It's your goal to help them
see that you have the ability to make your monthly payments and that there is
very little risk in approving your mortgage. Be ready to demonstrate all of
your sources of income and that your credit rating is clean. It may be worth
paying for your credit report before starting the pre-approval process so you
can clean up any black marks or false reports and so that you can see what the
lender will see when they check your credit history.

Choose the Right Property at the Right Price

As the home you're buying will be used as collateral to back
the mortgage, the lender will need to see that there is enough value in the
home to cover the cost of the mortgage should you fail to pay it back. The
"loan to value" or LTV ratio is the amount of your mortgage divided
by the value of the home. For example, if you're borrowing $150,000 to buy a
home valued at $200,000, you'll have a LTV ratio of 75 percent. Keep in mind
that each lender will have their own target LTV that they prefer to work with,
so you may need to shop around a bit.

Start the Process with Multiple Lenders

Finally, if you feel that your income or credit history
isn't perfect you may want to consider visiting a couple of different mortgage
lenders to see what they can offer you. There are dozens of different mortgage
products on the market today, and each lender has their own set of
qualification criteria that they will use to assess risk and whether they feel
that you can afford to pay the mortgage back. Getting a second opinion may help
you to discover a more suitable mortgage or one with a better interest rate.

As you can see, there are a number of
ways that you can work to ensure that your mortgage pre-approval passes without
a hitch. After you're approved it's only a matter of time before you'll be
moving in to your new home.